Improving Work Supports

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Improving Work Supports

• Nancy K. Cauthen
• Deputy Director, National Center for Children in
  Poverty
• Agenda for Shared Prosperity Alleviating Poverty
• Economic Policy Institute Washington, DC
  October 2, 2007

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Defining the Challenge
Too many low-paying jobs

• A quarter to a third of US workers35 to 46
  millionhold low-wage jobs that provide few
  prospects for advancement and growth.
• Over a fifth of children in the US16
  millionlive in low-income families despite
  having a parent who works full time, year round.
• Low-wage jobs typically lack benefits that
  higher-income workers take for granted health
  insurance, paid sick leave, and retirement plans.

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Defining the Challenge
What it takes to make ends meet

• NCCPs Basic Needs Budgets, EPIs Basic Family
  Budgets, and WOWs Self-Sufficiency Standards all
  make the same point
• Families need an income of 1.5 to 3 times the
  poverty level to cover basic family needs.
• 26,000 to 52,000 for a family of 3
• 31,000 to 62,000 for a family of 4

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Defining the Challenge
Work supports can help close the gap between
low wages and basic expenses

• Government benefits can help low-wage workers
  make ends meet.
• Earned income tax credits
• Child care assistance
• Health insurance
• Housing assistance
• Food stamps
• Transportation

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The Need for Reform
We need to expand access to work supports

• Few families and individuals receive the work
  supports for which they are financially eligible.
  
• Overall funding levels are inadequate and current
  funding mechanisms (e.g., fixed block grants and
  state matching requirements) also constrain
  benefit access.
• Other access barriers burdensome application
  procedures, complex rules and delivery systems,
  and lack of coordination among programs.

www.nccp.org
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The Need for Reform
Work support programs are limited by their
association with welfare

• Work support benefits are often still accessed
  through welfare offices, which increases stigma
  and discourages applications.
• Single mothers and their children remain the
  primary recipients of work supports. Benefits for
  non-custodial parents, low-wage workers without
  children, and two-parent families are not widely
  available and tend to be less generous.

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The Need for Reform
Families who do receive multiple benefits face a
paradox

• Most benefits are means-tested so as earnings
  increase, families begin to lose eligibility even
  though earnings are not yet adequate.
• In some cases, just a small increase in earnings
  can trigger a sharp reduction in benefits.
• The result? Despite earning more, families may be
  no better offor even worse offthan before.

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Finding Solutions
Goals for a modernized work support system

• Full-time work combined with public benefits
  should be sufficient to cover basic family
  expenses.
• Earning more should always improve a familys
  bottom line.
• Funding for work supports should expand during
  economic downturns and be adequate to serve all
  eligible applicants.
• Work supports should be efficiently administered
  and easily accessible.
• Work supports should provide a bridge to the
  middle class.

www.nccp.org
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Finding Solutions
Specific policy recommendations

• Earned Income Tax Credit (EITC)
• Increase the maximum benefit for non-custodial
  parents and childless workers.
• Extend benefits to younger workers (under 24)
  unless they are full-time students.
• Reduce marriage penalties.
• Increase benefits for larger families.
• Child Tax Credit (CTC)
• Make the CTC fully refundable.

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Finding Solutions
Specific policy recommendations (cont.)

• Child care assistance
• Guarantee access to child care assistance to low-
  and moderate-income families through the subsidy
  system.
• Require the federal government to assume a larger
  share of the costs to reduce inequities across
  states and to ensure access during economic
  downturns.
• Eliminate the Child Care Tax Credit and use
  savings to (1) expand child care subsidies, and
  (2) expand the CTC to provide additional child
  care benefits to both employed and stay-at-home
  parents.

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Finding Solutions
Specific policy recommendations (cont.)

• Housing vouchers
• Only a quarter to a third of eligible individuals
  and families receive assistance (about 2
  million).
• Double or triple the number of vouchers in
  circulation.
• Increase incentives for public housing
  authorities to offer the homeownership option
  through the voucher program (e.g., provide
  administrative funds to support start-up and
  implementation).
• Consider placing restrictions on the home
  mortgage interest deduction to fund an expansion
  of low-income housing assistance.

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Finding Solutions
Specific policy recommendations (cont.)

• Food stamps
• Eliminate the gross income test, which would
  eliminate the food stamp cliff.
• Eliminate asset tests which make small amounts of
  savings a barrier to receiving benefits.
• Transportation assistance
• Provide tax credits to subsidize the costs of
  commuting for low- to moderate-income workers.
• Increase incentives for expanding mass transit.

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The Biggest Challenge Political Will

• We have to make the case that
• Millions of Americans are working hard yet still
  not able to make ends meet.
• In the absence of higher wages and better jobs,
  government has an obligation to help low-wage
  workers (especially those working full time) to
  at least get by, if not to get ahead.
• If the American Dream is to live on, government
  needs to provide work supports while we empower
  workers (and others) to fight to turn bad jobs
  into good jobs.

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